What is Turtle Trading?

A famous trading experiment that taught beginners a breakout system using Donchian Channels. It proved trading could be taught with rules.

Key Takeaways

Difficulty:Beginner

Reliability:High

Category:volatility

Timeframes:4H, Daily, Weekly

Donchian Channels

volatility📊 4H, Daily, Weekly

Price channels formed by the highest high and lowest low over a specified period.

Formula

Code

Upper Band = Highest High over N periods

Lower Band = Lowest Low over N periods

Middle = (Upper + Lower) / 2

Detailed Explanation

Donchian Channels, created by Richard Donchian, plot the highest high and lowest low over a period.

Famous Usage:
The Turtle Trading experiment used Donchian Channels for entry signals:
- Buy when price exceeds 20-day high
- Sell when price falls below 20-day low

Trading Setup Example

Entry, stop loss, and take profit levels.

📈 Buy Setup

📉 Sell Setup

Always wait for signal confirmation before entering a trade.

Where This Indicator Works Best

Trend context and market position.

📈 Bullish Context

📉 Bearish Context

Measures market volatility and identifies breakout opportunities.

Live Chart — Donchian Channels

See Donchian Channels in action on a live chart. Try changing the settings and timeframe.

Charts powered by TradingViewGet TradingView Pro →

Parameters

Period

Default: 20

Lookback period

📈 Bullish Signals

Price breaks above upper band (new 20-day high)

📉 Bearish Signals

Price breaks below lower band (new 20-day low)

Python Implementation

Donchian Channels calculation

Python

import pandas_ta as ta

dc = ta.donchian(df['high'], df['low'], lower_length=20, upper_length=20)

df['DC_Upper'] = dc['DCU_20_20']

df['DC_Middle'] = dc['DCM_20_20']

df['DC_Lower'] = dc['DCL_20_20']

TradingView Pine Script

Try on TradingView

JavaScript

//@version=5

indicator("Donchian Channels", overlay=true)

upper = ta.highest(high, 20)

lower = ta.lowest(low, 20)

middle = (upper + lower) / 2

plot(upper, "Upper", color=color.red)

plot(middle, "Middle", color=color.gray)

plot(lower, "Lower", color=color.green)

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MT5 MQL5 Code

C++

double upper = iHigh(_Symbol, _Period, iHighest(_Symbol, _Period, MODE_HIGH, 20, 0));

double lower = iLow(_Symbol, _Period, iLowest(_Symbol, _Period, MODE_LOW, 20, 0));

Python Libraries

pandas-ta

Technical analysis

pip install pandas-ta

Common Mistakes

✗Not using proper position sizing with breakouts

✗Ignoring false breakouts

Confirmation Signals

Volume on breakout

ADX

Price action

Best For

Breakout tradingTrend followingTurtle Trading

💡 Pro Tips

•Used in the famous Turtle Trading system
•Simple but effective breakout indicator
•20-day and 55-day are popular periods

Last updated: February 8, 2026

Educational Disclaimer

This content is for educational purposes only and does not constitute financial or investment advice. Trading involves significant risk and you may lose your capital. Always consult a licensed financial advisor before making investment decisions.

Learn More

Investopedia - Technical Indicators— Financial Education BabyPips - Technical Indicators— Trading School MetaTrader 5 Docs— Official Documentation

Frequently Asked Questions

Related Indicators

Bollinger Bands

Consists of a middle band (SMA) and upper/lower bands set at standard deviations from the middle.

Average True Range (ATR)

Measures market volatility by calculating the average range between high and low prices.

Keltner Channels

Volatility-based envelopes using EMA and ATR, similar to Bollinger Bands but smoother.

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